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Chapter 8—Segmenting and Targeting Markets 3. A market is people or organizations that have: a. the ability, willingness, and power to buy b. a medium of exchange and products they desire c. needs and wants and an ability and willingness to buy d. unmet needs or wants and products or services that satisfy those unmet needs or wants e. communication, financial, and capital resources ANS: C A market is defined as having four imperative characteristics: people or organizations, needs and wants, ability to buy, and willingness to buy. PTS: 1 REF: 121 OBJ: 08-1 TOP: AACSB Reflective Thinking KEY: CB&E Model Customer MSC: BLOOMS Knowledge 4. A(n) _____ is a subgroup of individuals or organizations sharing one or more characteristics that cause them to have similar product needs. a. market universe b. market segment c. aggregated market d. segmentation base e. population sample ANS: B This is the definition of a market segment. PTS: 1 REF: 121 OBJ: 08-1 TOP: AACSB Reflective Thinking KEY: CB&E Model Customer MSC: BLOOMS Knowledge 7. _____ is the process of dividing a market into meaningful groups that are relatively similar and identifiable. a. Perceptual mapping b. Positioning c. Micromarketing d. Market sampling e. Market segmentation ANS: E This is the definition of market segmentation. PTS: 1 REF: 122 OBJ: 08-1 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Knowledge 8. The purpose of market segmentation is to: a. reduce the market down to a size the firm can handle b. divide the market into equal size and profit regions for sales territories c. group a large number of markets together, enabling a company to serve them simultaneously d. develop a generalized definition of the market as a whole e. enable the marketer to tailor marketing mixes to meet the needs of one or more specific groups ANS: E The purpose of segmentation is to group similar consumers and to serve their needs with a specialized marketing mix. PTS: 1 REF: 122 OBJ: 08-1 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Comprehension 1 11. All of the following are criteria for successful market segmentation EXCEPT: a. substantiality b. identifiability and measurability c. accountability d. accessibility e. responsiveness ANS: C The four criteria are substantiality, identifiability and measurability, accessibility, and responsiveness. PTS: 1 REF: 122 KEY: CB&E Model Strategy OBJ: 08-3 TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 12. To be useful, a segmentation scheme must produce segments that meet four basic criteria. The criteria are: a. segmentability, targetability, reliability and validity, and homogeneity b. tangibility, inseparability, nonperishability, and uniqueness c. substantiality, identifiability and measurability, accessibility, and responsiveness d. reliability, flexibility, tangibility, and unbiased e. complexity, compatability, relative advantage, trialability, and observability ANS: C Useful segments should be substantial, identifiable and measurable, accessible, and responsive to different marketing mixes. PTS: 1 REF: 122 KEY: CB&E Model Strategy OBJ: 08-3 TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 19. The requirement for a market segment to be responsive means: a. over half of the consumers in the identified segment will be actively interested in the product b. all the segments identified by a marketer should respond to the marketing mix c. all the segments identified by a marketer should not respond to the marketing mix d. the segments identified by a marketer should not differ in the level of their responsiveness to the marketing mix e. the segment identified by a marketer should differ in how it responds to the marketing mix when compared to another segment confronted with the same mix ANS: E The target segment should respond differently to the marketing mix compared to other segments. PTS: 1 REF: 122-123 KEY: CB&E Model Customer OBJ: 08-3 TOP: AACSB Reflective Thinking MSC: BLOOMS Comprehension 2 22. If a market segment is especially motivated by coupons in newspapers, which segmentation success criterion is most influential in the success of this program? a. Responsiveness b. Identifiability and measurability c. Substantiality d. Accessibility e. Functionality ANS: A Responsiveness is in force when a target segment responds differently (hopefully more positively) to the marketing mix than other segments. PTS: 1 REF: 122-123 KEY: CB&E Model Customer OBJ: 08-3 TOP: AACSB Reflective Thinking MSC: BLOOMS Comprehension 23. A health club has a new fitness program for expectant mothers. After flyers were placed at the offices of area obstetricians, classes filled up within two days. Which segmentation success criterion was most influential in the success of this promotion? a. Substantiality b. Identifiability c. Measurability d. Causality e. Responsiveness ANS: E Responsiveness is in force when a target segment responds differently (hopefully more positively) to the marketing mix than other segments. PTS: 1 REF: 122-123 KEY: CB&E Model Customer OBJ: 08-3 TOP: AACSB Reflective Thinking MSC: BLOOMS Application 3 24. _____ are characteristics of individuals, groups, or organizations that marketers use to divide a total market into segments. a. Differentiation guides b. Segmentation bases c. Perceptual maps d. Responsiveness quotients e. Accessibility quotients ANS: B This is the definition of segmentation bases. PTS: 1 REF: 123 KEY: CB&E Model Customer OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 27. _____ is the segmenting of markets based on the region of the country or the world, market size, market density (number of people within a certain unit of land), or climate. a. Community segmentation b. Geographic segmentation c. Geodemographic segmentation d. PRIZM segmentation e. Demonstrated regionalization ANS: B This is the definition of geographic segmentation. PTS: 1 REF: 123 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge PTS: 1 REF: 123-124 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Application 31. Almost all cell phones sold in the United States are black or gray. Almost all cell phones sold in Europe are colorful, and very few black phones are sold. A cell phone manufacturer knowing this information could use _____ segmentation when selling its phones internationally. a. geographic b. economic c. demographic d. benefit e. multipositioning ANS: A Geographic segmentation includes segmenting markets by region of the country or world. PTS: 1 REF: 123-124 OBJ: 08-4 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy | CB&E Model International Perspective MSC: BLOOMS Application 32. All of the following statements are reasons why consumer goods companies take a regional approach to marketing rather than a national approach EXCEPT: a. Many firms need to find new ways to generate sales because of sluggish and intensely competitive markets. 4 b. A regional approach gives marketing managers control over the competitive environment. c. Computerized checkout stations with scanners enable retailers to assess accurately which brands sell the best in each region. d. Many packaged-goods manufacturers are introducing new regional brands intended to appeal to local preferences. e. A more regional approach allows consumer goods companies to react more quickly to competition. ANS: B The competitive environment is one of the noncontrollable factors in a company’s environment. PTS: 1 REF: 124 OBJ: 08-4 KEY: CB&E Model Distribution | CB&E Model Strategy TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 33. Marketers use _____ to segment markets because this information is widely available, and factors such as age or gender are often related to consumer purchasing and consumption behavior. a. benefits b. psychographics c. demographics d. usage rates e. sociocultural attributes ANS: C Common bases of demographic segmentation are age, gender, income, ethnic background, and family life cycle. PTS: 1 REF: 124 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Comprehension 5 34. Income, ethnic background, gender, and age are all examples of _____ segmentation bases. a. geodemographic b. organizational c. demographic d. socioeconomic e. psychographic ANS: C These are demographic characteristics of consumers. PTS: 1 REF: 124 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 44. In Miami, several radio stations broadcast in Spanish and play Latin music for the Hispanic people living in South Florida. The radio stations are using _____ segmentation. a. usage rate b. ethnic c. socioeconomic d. geographic e. gender ANS: B In this case, ethnicity would be the demographic variable. PTS: 1 REF: 126 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Application 46. A series of stages determined by a combination of age, marital status, and the presence or absence of children is known as the: a. generation gap b. family life cycle c. maturation process d. segmentation cycle e. psychographic process ANS: B This describes the family life cycle. PTS: 1 REF: 126-127 KEY: CB&E Model Customer OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 6 49. Which of the following businesses would be most likely to use family life cycle segmentation? a. Those that produce and market computer software and hardware b. The snack industry c. Fast-food restaurants d. Business-to-business marketers e. Wedding planners, couples-only resorts, and day care centers ANS: E People in different stages of the family life cycle would be most likely getting married, going on a couples-only trip, or needing the services of a day care center. PTS: 1 REF: 126-127 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Evaluation 50. _____ segmentation is based on personality, motives, and lifestyles. a. Psychographic b. Demographic c. Benefit d. Family life cycle e. Character ANS: A Personality, motives, and lifestyles are bases of psychographic segmentation. PTS: 1 REF: 127 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 51. All of the following are bases for psychographic segmentation EXCEPT: a. benefits b. personality c. motives d. lifestyles e. geodemographics ANS: A Benefit segmentation is a different segmentation strategy that groups customers on the basis of their needs and wants. PTS: 1 REF: 127 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 7 57. _____ divides individuals into groups according to the way they spend their time, the importance of items in their surroundings, their beliefs, and socioeconomic characteristics. a. Life cycle segmentation b. Temporal segmentation c. Lifestyle segmentation d. Microsegmentation e. Macrosegmentation ANS: C This describes the essence of lifestyle segmentation. PTS: 1 REF: 127 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 58. _____ is a method that clusters potential customers into neighborhood lifestyle categories and is a combination of geographic, demographic, and lifestyle segmentations. a. Geodemographic segmentation b. Microsegmentation c. Sociocultural clustering d. Acculturation e. Lifestyle segmentation ANS: A This is the definition of geodemographic segmentation. PTS: 1 REF: 127 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 62. _____ is the process of grouping customers into market segments according to the benefits sought from the product. a. Benefit segmentation b. Value-added segmentation c. Lifestyle segmentation d. Macrosegmentation e. Psychographic segmentation ANS: A This is the definition of benefit segmentation. PTS: 1 REF: 129 OBJ: 08-4 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Knowledge 69. Which type of segmentation divides a market by the amount of product bought or consumed? a. Benefit segmentation b. Characteristic segmentation c. Usage-rate segmentation d. Demographic segmentation e. Psychographic segmentation ANS: C This is the definition of usage-rate segmentation. PTS: 1 REF: 129 OBJ: 08-4 8 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Knowledge 70. Most airline frequent flyer programs reward the most frequent flyers with business class upgrades and flight lounge privileges. Airlines are using these rewards as a means of implementing _____ segmentation. a. lifestyle b. motive c. usage-rate d. demographic e. personality ANS: C Usage-rate segmentation divides a market by consumption so that firms can target their heavy users. PTS: 1 REF: 129 KEY: CB&E Model Strategy OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Application 74. What does the 80/20 principle propose? a. Roughly 80 percent of the profit comes from 20 percent of the sales. b. Roughly 80 percent of a firm’s customers are repeat business. c. Roughly 50 percent of a firm’s customers purchase 80 percent of the sales volume of the product. d. Roughly 20 percent of a firm’s customers purchase 80 percent of the sales volume of the product. e. Sales are equally divided among heavy, medium, and light users, but they all need slightly different products. ANS: D The 80/20 principle proposes that a minority of a firm’s customers purchase a majority of the volume of the product. PTS: 1 REF: 129 KEY: CB&E Model Customer OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 9 75. The _____ proposes that a minority of a firm’s customers purchase a majority of the volume of the product. a. majority fallacy b. equity fallacy c. 80/20 principle d. cannibalization rule e. optimizer principle ANS: C This is the definition of the 80/20 principle. PTS: 1 REF: 129 KEY: CB&E Model Customer OBJ: 08-4 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 77. Business marketers focus on all of the following market segments EXCEPT: a. institutions b. producers c. households d. resellers e. government ANS: C The business market consists of four broad segments: producers, resellers, government, and institutions. Households are part of the consumer market. PTS: 1 REF: 129 KEY: CB&E Model Strategy OBJ: 08-5 TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 80. Firms can be categorized by the type of purchasing strategy they use. _____ usually contact familiar suppliers and place an order with the first that can meet product and delivery requirements. a. Strugglers b. Actualizers c. Optimizers d. Satisficers e. Experiencers ANS: D This is the definition of satisficers. PTS: 1 REF: 130 KEY: CB&E Model Customer OBJ: 08-5 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 10 81. Hank operates a plumbing and electrical supply store. He has categorized its business customers by their purchasing strategy. Hank has found it much easier to serve and satisfy the _____, who usually recontact familiar suppliers and place an order immediately if product and delivery requirements are acceptable. a. adopters b. adapters c. optimizers d. innovators e. satisficers ANS: E Satisficers use a simple, quick purchasing strategy of looking for the first available adequate supplier. PTS: 1 REF: 130 KEY: CB&E Model Customer OBJ: 08-5 TOP: AACSB Reflective Thinking MSC: BLOOMS Application 84. What is the first step in segmenting a market? a. Set the segmentation goals b. Choose a basis or bases for segmenting the market c. Select a market or product category for study d. Profile and analyze segments e. Select target markets ANS: C The steps in segmenting a market are (1) select a market or product category for study; (2) choose a basis or bases for segmenting the market; (3) select segmentation descriptors; (4) profile and analyze segments; (5) select target markets; and (6) design, implement, and maintain appropriate marketing mixes. PTS: 1 REF: 131 KEY: CB&E Model Strategy OBJ: 08-6 TOP: AACSB Reflective Thinking MSC: BLOOMS Comprehension 11 85. All of the following are steps in the market segmenting process EXCEPT: a. determining the objectives of the segmentation strategy b. profiling and analyzing segments c. designing, implementing, and maintaining appropriate marketing mixes d. selecting a market or product category for study e. choosing a basis or bases for segmenting the market ANS: A The steps in segmenting a market are (1) select a market or product category for study; (2) choose a basis or bases for segmenting the market; (3) select segmentation descriptors; (4) profile and analyze segments; (5) select target markets; and (6) design, implement, and maintain appropriate marketing mixes. PTS: 1 REF: 131 KEY: CB&E Model Strategy OBJ: 08-6 TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 86. June LaVista owns a health and fitness gym. After dividing her customers into four segments based on income range, age, level of fitness, and other selected segmentation descriptors, she wrote out a description of each segment’s size, expected growth, frequency of exercise, and overall profit potential. Which step in segmenting a market is LaVista engaged in? a. Profiling and analyzing her market segments b. Positioning her products to her market segments c. Targeting promotions to her market segments d. Differentiating her market segments e. Concentrating her marketing mix on the most profitable marketing segments ANS: A The profiling and analysis of the segments step in segmenting a market involves analyzing the segments’ size, expected growth, purchase frequency, and so on. PTS: 1 REF: 131 KEY: CB&E Model Strategy OBJ: 08-6 TOP: AACSB Reflective Thinking MSC: BLOOMS Application 87. After selecting a market for study and choosing bases for segmenting that market, the next step is to: a. select segmentation descriptors b. implement and maintain a marketing mix c. design a marketing mix d. profile and analyze segments e. select target markets ANS: A The steps in segmenting a market are (1) select a market or product category for study; (2) choose a basis or bases for segmenting the market; (3) select segmentation descriptors; (4) profile and analyze segments; (5) select target markets; and (6) design, implement, and maintain appropriate marketing mixes. PTS: 1 REF: 131 KEY: CB&E Model Strategy OBJ: 08-6 TOP: AACSB Reflective Thinking MSC: BLOOMS Comprehension 12 89. Market segmentation: a. is a scientific technique for selecting ways to attract specific population samples b. is rarely done by consumer products companies c. only needs to be done once for each product d. should be redone periodically e. should be done every time a product enters a new stage of its life cycle ANS: D Markets are dynamic, so it is important that companies proactively monitor their segmentation over time. PTS: 1 REF: 131 KEY: CB&E Model Strategy OBJ: 08-6 TOP: AACSB Reflective Thinking MSC: BLOOMS Comprehension 90. A(n) _____ is a group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges. a. heterogeneous segment b. target market c. responsive segment d. aggregated market e. undifferentiated target ANS: B This is the definition of a target market. PTS: 1 REF: 131 KEY: CB&E Model Customer OBJ: 08-7 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 93. Which target marketing strategy views the market as one big market with no individual segments and thus uses a single marketing mix? a. Undifferentiated b. Concentrated c. Niche d. Uniform e. Multisegmented ANS: A A firm using an undifferentiated targeting strategy essentially adopts a mass-market philosophy, viewing the market as one big market with no individual segments. PTS: 1 REF: 131-132 OBJ: 08-7 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Knowledge 96. All of the following are advantages of using a concentrated targeting strategy EXCEPT: a. concentration of resources b. can better meet the needs of a narrowly defined segment c. allows some small firms to better compete with larger firms d. strong positioning e. cannibalization ANS: E Cannibalization is a disadvantage of multisegment targeting. See Exhibit 8.2. PTS: 1 REF: 132 KEY: CB&E Model Strategy OBJ: 08-7 TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 13 97. A(n) _____ strategy entails selecting one segment of a market to target and focuses on understanding the needs, motives, and satisfactions of the members of that segment, as well as on developing a highly specialized marketing mix. a. universal product b. undifferentiated targeting c. concentrated targeting d. market development e. product development ANS: C Concentrated targeting strategy selects one segment of a market for targeting marketing efforts. PTS: 1 REF: 133 OBJ: 08-7 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Knowledge 99. When a firm uses a concentrated targeting strategy, it can: a. view the total market as receptive to its product b. offer a highly specialized marketing mix c. reach customers in two or more segments that might otherwise be missed d. avoid the danger of putting all resources in one micromarket e. concentrate on one generalized product to fit the mass market, maximizing sales volume ANS: B Concentrated targeting focuses on one target market and develops a highly specialized mix. PTS: 1 REF: 133 OBJ: 08-7 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Comprehension 107. _____ is one of the potential disadvantages associated with a multisegment strategy. a. Inadequate demand b. Demarketing c. Lower profits d. Cannibalization e. Loss of synergy ANS: D Cannibalization is a situation that occurs when sales of a new product cut into sales of a firm’s existing products. PTS: 1 REF: 134 OBJ: 08-7 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Comprehension 111. An individualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer is referred to as: a. 80/20 marketing b. interpersonal marketing c. zoned marketing d. one-to-one marketing e. individual marketing ANS: D This is the definition of one-to-one marketing. PTS: 1 REF: 134 OBJ: 08-8 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Knowledge 14 114. Increasing share of customer means: a. selling more products to each customer b. increasing the number of customers c. winning market share from competitors d. the sales due to a customer relative to the costs of attaining and retaining that customer e. individual customer revenue minus costs to satisfy that customer ANS: A Share of customer represents how much a customer spends with a business, so increasing customer share attempts to sell more products to each customer rather than attempting to gain more customers overall. PTS: 1 REF: 134 OBJ: 08-8 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Comprehension 115. The basic goal of one-to-one marketing is to: a. increase the market for the product category to new and current customers b. eliminate the use of mass media for promotion and locate a direct communications channel c. increase operating costs and locate new customers d. reduce the number of company employees and increase overall sales e. reduce costs through customer retention and increase revenue through customer loyalty ANS: E Loyal customers are less costly to maintain than acquiring new customers. PTS: 1 REF: 134 OBJ: 08-8 TOP: AACSB Reflective Thinking KEY: CB&E Model Strategy MSC: BLOOMS Comprehension 116. All of the following have been identified as trends that will lead to the continuing growth of one-toone marketing EXCEPT: a. the growing number of customers who do not have time to spend shopping b. the fact that consumers do not want to be treated like the masses c. technology that allows the collection of detailed information on customers d. consumers are loyal to companies and brands that have earned their loyalty and reinforce it at every purchase occasion e. mass marketing is no longer appropriate, especially for consumer packaged-goods products ANS: E All of these are trends impacting the growth of one-to-one marketing except the inappropriateness of mass marketing for consumer packaged-goods products. PTS: 1 REF: 135 KEY: CB&E Model Strategy OBJ: 08-8 TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 118. Product positioning is the process of: a. finding the correct location for retail outlets to sell a product category b. finding the right channel of distribution for a product c. creating the desired image of the firm’s product d. competing with competitors’ products in the retailers’ stores for the best position on the shelf e. pricing the product to be at a competitive level with other brands on the market ANS: C Positioning is developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general. 15 PTS: 1 REF: 135 KEY: CB&E Model Strategy OBJ: 08-9 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 119. _____ is the development of a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general and is related to the place a product occupies in consumers’ minds relative to competing offerings. a. Market differentiation b. Diversification c. Combination marketing d. Positioning e. Market aggregation ANS: D This is the definition of positioning. PTS: 1 REF: 135 KEY: CB&E Model Strategy OBJ: 08-9 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 121. The place a product, brand, or group of products occupies in consumers’ minds relative to competing offerings is referred to as a product’s: a. status b. equity c. frame d. role e. position ANS: E This is the definition of a product’s position. PTS: 1 REF: 135 OBJ: 08-9 TOP: AACSB Reflective Thinking KEY: CB&E Model Product MSC: BLOOMS Knowledge 124. Products such as bleaches, aspirin, unleaded regular gasoline, and some soaps are distinguished by differences such as brand names, packaging, color, smell, or “secret” additives. With these products, marketers attempt to convince customers that their product is significantly different from the others and should therefore be demanded over competing brands. These marketers are using: a. cannibalization b. perceptual mapping c. psychographic targeting d. integrated marketing e. product differentiation ANS: E Product differentiation is a positioning strategy that some firms use to distinguish their products from those of competitors. PTS: 1 REF: 135 OBJ: 08-9 TOP: AACSB Reflective Thinking KEY: CB&E Model Product MSC: BLOOMS Application 127. Which of the following is a means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds? a. Perceptual mapping b. Product positioning c. Market segmentation d. Product tracing e. Laddering ANS: A This is the definition of perceptual mapping. 16 PTS: 1 REF: 136 KEY: CB&E Model Product OBJ: 08-9 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 129. All of the following are typical bases for positioning EXCEPT: a. attribute b. price and quality c. distribution d. emotion e. product user ANS: C Typical bases for positioning include attribute, price and quality, use or application, product user, product class, competitor, and emotion. PTS: 1 REF: 136-137 KEY: CB&E Model Strategy OBJ: 08-9 TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 133. Changing consumers’ perceptions of a brand in relation to competing brands is known as: a. positioning b. repositioning c. reintermediation d. demarketing e. reengineering ANS: B This is the definition of repositioning. PTS: 1 REF: 137 KEY: CB&E Model Strategy OBJ: 08-9 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 17 Chapter 21—Customer Relationship Management (CRM) 1. _____ is a company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups. a. Organizational optimization b. Consumer relationship marketing (CRM) c. Total quality management (TQM) d. Customer relationship management (CRM) e. Market aggregation ANS: D This is the definition of customer relationship management (CRM). PTS: 1 REF: 337 OBJ: 21-1 KEY: CB&E Model Customer | CB&E Model Strategy TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 6. Customer relationship management is accomplished by all of the following EXCEPT: a. offering the lowest prices of all major competitors b. organizing the company around customer segments c. establishing and tracking customer interactions with the company d. fostering customer-satisfying behaviors e. linking all processes of the company from its customers through its suppliers ANS: A CRM is a company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer segments, but it does not mean that offering the lowest prices is necessary. PTS: 1 REF: 337 OBJ: 21-1 KEY: CB&E Model Customer | CB&E Model Strategy TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 7. The difference between traditional marketing and customer relationship marketing can be compared to the difference between: a. night and day b. boning a fish and dressing a chicken c. mice and elephants d. shooting a rifle and a shotgun e. circles and squares ANS: D If you have good aim, a rifle is the more effective weapon to use (i.e., CRM). PTS: 1 REF: 337 KEY: CB&E Model Strategy OBJ: 21-1 TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 18 8. At its most fundamental level, a CRM approach is no more than: a. the relationship cultivated by a salesperson with a customer b. a mass marketing approach c. a transactional selling approach d. a customer satisfaction program e. a differentiation strategy ANS: A Fundamentally, a CRM approach is no more than the relationship cultivated by a salesperson with the customer. PTS: 1 REF: 338 OBJ: 21-1 KEY: CB&E Model Customer | CB&E Model Strategy TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 9. To initiate the CRM cycle, a company must first: a. establish marketing objectives b. captures relevant customer data on interactions c. identify customer relationships with the organization d. understand the interactions the company has with current customers e. Decides on a segmentation strategy ANS: C To initiate the CRM cycle, a company must first identify customer relationships with the organization. PTS: 1 REF: 338 OBJ: 21-1 KEY: CB&E Model Customer | CB&E Model Strategy TOP: AACSB Reflective Thinking MSC: BLOOMS Comprehension 10. Which of the following statements about the CRM cycle is true? a. The letters CRM are an acronym for consumer relationship marketing. b. The CRM cycle does not affect employees outside the marketing and management functional areas. c. The CRM cycle is continuous and circular with no predefined start or end point. d. The CRM cycle takes a simplistic perspective on customers. e. All of these statements about the CRM cycle are true. ANS: C CRM is often described as a closed-loop system that builds relationships with customers––one that is continuous and circular with no predetermined starting or end points. PTS: 1 REF: 338 OBJ: 21-1 KEY: CB&E Model Customer | CB&E Model Strategy 19 TOP: AACSB Reflective Thinking MSC: BLOOMS Analysis 12. As the second step in the CRM cycle a company must: a. establish marketing objectives b. capture relevant customer data on interactions c. identify customer relationships with the organization d. understand the interactions the company has with current customers e. decide on a segmentation strategy ANS: D To initiate the CRM cycle, a company must first identify customer relationships with the organization. Next, the company must understand the interactions with current customers. PTS: 1 REF: 338 OBJ: 21-1 KEY: CB&E Model Customer | CB&E Model Strategy TOP: AACSB Reflective Thinking MSC: BLOOMS Comprehension 13. Which of the following statements about a CRM system is true? a. A critical component of a CRM system is the use of the appropriate technology to store and integrate customer data. b. A CRM system operates on the theory that all customers are equally important. c. Due to privacy laws, a CRM system only disseminates customer information to those who are actually in day-to-day contact with customers. d. A company using a CRM system must view its customers as bits of data. e. All of these statements about a CRM system are true. ANS: A Information technology is used not only to enhance the collection of customer data, but also to store and integrate customer data throughout the company and, ultimately, to “get to know” customers on a personal basis. See Exhibit 21.1. PTS: 1 REF: 338 OBJ: 21-1 KEY: CB&E Model Customer | CB&E Model Strategy TOP: AACSB Technology MSC: BLOOMS Analysis 14. A company that has a(n) _____ customizes its product and service offerings based on data generated through interactions between the customer and the company. a. ethnocentric perspective b. supply-based focus c. sales orientation d. supply-based focus e. customer-centric focus ANS: E A customer-centric focus is an internal management philosophy similar to the marketing concept. PTS: 1 REF: 339 KEY: CB&E Model Customer OBJ: 21-2 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 20 16. Customer-centric is an internal management philosophy similar to: a. utilitarianism b. Herzberg’s theory of motivation c. the equity theory d. the marketing concept e. consumerism ANS: D Under this philosophy, the company customizes its product and service offering based on data generated through interactions between the customer and the company. PTS: 1 REF: 339 KEY: CB&E Model Strategy OBJ: 21-2 TOP: AACSB Reflective Thinking MSC: BLOOMS Comprehension 18. In a CRM environment, _____ is defined as an informal process of collecting customer data through customer comments and feedback on product or service performance. a. leveraging b. knowledge management c. interaction d. data mining e. learning ANS: E This is the definition of learning (in a CRM environment). PTS: 1 REF: 340 KEY: CB&E Model Customer OBJ: 21-2 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 19. _____ refers to the latitude organizations give their representatives to negotiate mutually satisfying commitments with customers. a. Consumer learning b. Customerization c. Empowerment d. Autonomy e. Interaction ANS: C Empowerment is the delegation of authority to solve customers’ problems quickly––usually by the first person the customer notifies regarding the problem. PTS: 1 REF: 340 KEY: CB&E Model Customer OBJ: 21-2 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 21 21. _____ is the process by which learned information from customers is centralized and shared in order to enhance the relationship between customers and the organization. a. Knowledge management b. Learning c. Database marketing d. Interactive marketing e. Information marketing ANS: A This is the definition of knowledge management. PTS: 1 REF: 340 KEY: CB&E Model Customer OBJ: 21-2 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 23. A(n) _____ is the point at which a customer and a company representative exchange information and develop learning relationships. a. social contact b. interaction c. empowering moment d. equilibrium point e. transactional dyad ANS: B An interaction is a touch point at which a customer and a company representative exchange information and develop learning relationships, but with CRM, it is the customer, not the organization, that defines the terms of the interaction. PTS: 1 REF: 340 KEY: CB&E Model Customer OBJ: 21-2 TOP: AACSB Reflective Thinking MSC: BLOOMS Knowledge 22